The VCs took a risk by choosing to use the same bank, not insuring the deposits beyond the FDIC minimum, then stamping toward the exit every man for themselves instead of looking after their own community. Privatized gains and socialized losses.
Obviously they were getting perks working with 'Silicon Valley Bank' that didn't exist at say, Wells Fargo. No farmer in America was banking there because, hey, that's obviously kind of a sketchy bank.
There was a reward being given to the wealthy depositors, and none bothered to investigate the associated risk. Well, actually, Thiel did, noticed the risk, and pulled out his companies. Why should we bail out the people who missed this?
Wtf are you talking about? It was the 20th largest bank in the country. It wasn’t some sketchy thing exclusively for startups.